While buying interest was relatively subdued, stocks moved mostly higher over the course of the trading day on Wednesday. Upbeat housing data helped to push the markets higher despite the release of some mixed earnings news.
The major averages all ended the day in positive territory, although the Dow inched up only 5.22 points or less than a tenth of a percent to 13,557.00. The Nasdaq edged up 2.95 points or 0.1 percent to 3,104.12, while the S&P 500 rose 5.99 points or 0.4 percent to 1,460.91.
The modest strength on Wall Street was largely due to a positive reaction to a report from the Commerce Department showing a substantial increase in housing starts in the month of September.
The report said housing starts jumped 15 percent to an annual rate of 872,000 in September from the revised August estimate of 758,000. Economists had expected starts to climb to 765,000 from the 750,000 originally reported for the previous month.
With the much stronger than expected monthly growth, the annual rate of housing starts reached its highest level since July of 2008.
Building permits, an indicator of future housing demand, also surged up by 11.6 percent to an annual rate of 894,000 in September from the revised August rate of 801,000. The increase in building permits also exceeded expectations.
In a research note, Capital Economics said, "The U.S. economy appears to be developing a split personality. Households, seemingly oblivious to the scheduled jump in marginal tax rates that will reduce their after-tax income next year, are apparently growing in confidence and boosting expenditure."
"At the same time, alarmed by the looming fiscal cliff and the global slowdown, businesses appear to be slashing investment," the firm added.
Meanwhile, a mixed batch of earnings news helped to limit the upside for the markets, with tech giants Intel (INTC) and IBM (IBM) under pressure after reporting their quarterly results.
While Intel reported better than expected third quarter results, the semiconductor giant warned of a difficult environment ahead. Shares of Intel fell by 2.5 percent on the news.
IBM ended the day down by 4.9 percent after reporting third quarter earnings that came in just above analyst estimates on revenues that fell by more than expected.
Bank of America (BAC) posted a more modest loss after the financial giant reported third quarter earnings that showed a notable decrease year-over-year but exceeded analyst estimates for a loss. At the same time, the company reported revenues that fell by more than expected.
Housing stocks saw considerable strength on the heels of the housing starts data, with the Philadelphia Housing Sector Index surging up by 2.9 percent. During the session, the index reached its best intraday level in five years.
Hovnanian (HOV) and KB Home (KBH) turned in two of the housing sector's best performances, jumping by 9.3 percent and 8.7 percent, respectively.
Significant strength also emerged among brokerage stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Broker/Dealer Index. Morgan Stanley (MS) posted a notable gain ahead of the release of its quarterly results on Thursday.
Biotechnology stocks also showed a strong move to the upside, driving the NYSE Arca Biotechnology Index up by 2.1 percent. InterMune (ITMN) helped to lead the sector higher, surging up by 16.3 percent.
Steel, oil service, and banking stocks also saw notable strength on the day, while weakness was visible among electronic storage and software stocks.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, adding to yesterday's gains. Japan's Nikkei 225 Index jumped 1.2 percent, while Hong Kong's Hang Seng Index surged up by 1 percent.
The major European markets also moved to the upside on the day. While the German DAX Index edged up by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index advanced by 0.7 percent and 0.8 percent, respectively.
In the bond market, treasuries saw considerable weakness on the heels of the upbeat housing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, shot up by 9.1 basis points to 1.811 percent.
Trading on Thursday could be impacted by the release of some key economic data, including reports on weekly jobless claims, leading economic indicators, and Philadelphia-area manufacturing activity.
On the earnings front, American Express (AXP) and eBay (EBAY) are releasing their quarterly results after the close of today's trading, while Morgan Stanley, Travelers (TRV), and Verizon (VZ) are among the companies due to release their results before the start of trading on Thursday.
by RTT Staff Writer
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